NEW DELHI: As the Chinese cotton auction started at a 25 percent premium over the prevailing fibre rate in India, Indian exporters are pinning hopes on a revival in cotton yarn exports.
Despite a robust demand from Bangladesh, overall cotton yarn exports remained under pressure during the current financial year due to sluggish demand from China. For the April–December 2016, India’s cotton yarn exports slumped by 12 per cent to 872.19 million kgs from 987.21 million kgs in the corresponding period last year. Cotton yarn exports from India rose by a marginal 4.29 per cent at 1307.11 million kgs for the financial year 2015-16 from 1253.33 million kgs for the previous year.
The first day of Chinese auction quoted cotton prices between Rs 51,000 and Rs 56,000 a candy (356 kgs) as against Rs 42,000 a candy currently prevailing in most local markets here. This means Chinese cotton is costlier by a wide margin.
Also, the cotton being auctioned in China is up to seven-year old. By nature, the quality of natural cotton starts deteriorating after a two-three years as the fiber starts growing yellow.
Still Chinese spinning mills buying cotton perhaps for blending with fresh cotton. But, because of high prices, India tends to gain despite 3.5 per cent levy of duty by China on import from India.
India faces direct competition from Vietnam as China has allows zero duty import from there. So, instead of cotton, Chinese textiles mills would move to purchase cotton yarn from India.
“We are expecting, therefore, cotton yarn exports to turn positive this year after a steep decline last year,” said Siddhartha Rajagopal, Executive Director, The Cotton Textiles Export Promotion Council (Texprocil).